Pursuant to Rule 42(b) of the Federal Rules of Civil Procedure, Defendant/Counterclaim-Plaintiff
International Business Machines Corporation ("IBM"), through its undersigned
counsel, respectfully submits this response to SCO's Motion for Separate
Trials.

ARGUMENT

SCO moves for a separate trial with respect to IBM's patent counterclaims.
The motion should be denied without prejudice.

This case concerns the computer operating systems known as Unix and Linux[1].
SCO purports to have broad rights to these operating systems and alleges
that IBM has deprived SCO of its alleged rights. IBM contends that SCO has
misused, and is misusing, its purported rights to Unix and Linux (to extract
windfall profits for its unjust enrichment) and that, although SCO claims
to respect the intellectual property rights of others, it has infringed and
is infringing a number of IBM copyrights and patents.

Since SCO filed suit, the parties have traded a number of claims and counterclaims.
SCO has asserted nine claims against IBM[2]. IBM has
asserted fourteen counterclaims against SCO[3]. SCO
contends that IBM's patent claims should be split from the parties' other claims
and tried separately. According to SCO, the patent
claims are not only complex, but also they are distinct from the non-patent
claims such that a separate trial for the patent claims would promote fairness,
reduce prejudice and promote expedition and economy.

It is undisputed that the Court has considerable power to decide how a trial
should be conducted and broad discretion to decide whether and how to separate
claims and issues. Palace Exploration Co. v. Petroleum Dev. Co. 316
F.3d 1110, 1119(10th Cir. 2003). It may make sense ultimately for the Court
to adjudicate the claims and issues presented in more than one trial. Despite
SCO's present motion, however, there is no reason for the Court to decide
now whether to conduct more than one trial or, if there is to be more than
one trial, which claims and issues should be tried in what trial.

At this stage of the case, it is not clear which, if any, claims or issues
will require a trial. We believe that most (if not all) of the claims and
issues in suit can and should be resolved by summary judgment, without the
necessity of trial. Because SCO has not yet responded in full to IBM's discovery
requests and only one deposition has been taken (of a third party), however,
it is too soon to tell for sure how much and which parts of the case can
be handled by summary consideration under Rule 56. The answer to these questions
will be clear upon the resolution of dispositive motions; it is not clear
now.

We do not disagree with SCO's assertion that the case is complex (though,
frankly, SCO overstates the point). But that is not a reason to rush to split
the case. Rather, that is exactly why this Court should defer ruling on how
precisely to try the case. Because the case is complex, and we do not yet
know enough about which claims and issues (if any) will require a trial,
it is premature to determine how best to serve the pertinent interests. Only
after discovery and pretrial motion practice will the Court be in a position
meaningfully to determine which of the many possible trial plans best promotes
fairness, reduces prejudice and promotes expedition and economy.

Courts commonly defer deciding how to separate claims and issues for trial
until just before trial, and there is no reason why this Court should not
take the same approach. See e.g. Robinson v. Akins No. 89 C 5413,
1990 WL 114608, at *2 (N.D. Ill. July 27, 1990) ("motions for separate trials
should be explored at the pretrial conference stage and not before [because]...the
trial issues will have been clarified by discovery and the resolution of
various other pretrial motions"); McEwen v. Delta Air Lines No. 85
C 06742, 1985 WL 5065, at *1 (N.D. Ill. Dec. 19, 1985) ("it seems the better
part of discretion to defer any such possibility [of bifurcation] until the
case shakes down through discovery--most likely until the parties have submitted
the post-discovery pretrial order"); Banks v. Travelers Ins. Co. 60
F.R.D. 158, 163 (ED. Pa. 1973) ("We believe there would be little gained
by severing the claims at least before the end of discovery")[4].

In any event, splitting the patent and the non-patent claims for separate
adjudication probably is not the best way to proceed, especially if the Court
is disinclined to conduct more than two trials. According to SCO, the non-patent
claims are the crux of the case and can be divided into at least three separate
categories[5]. If SCO is correct (and remains correct after disposition of
dispositive motions), then it will likely make sense for the non-patent claims
to be the focus of any effort to separate claims and issues. The resolution
of certain, discrete non-patent issues would dispose of most of what SCO
calls the crux of the case. Moreover, the patent claims are simply not as
unrelated to the non-patent claims as SCO contends; nor are they likely to
be as unwieldly to try as SCO suggests. IBM alleges patent infringement with
respect to the very products from which SCO alleges that IBM has misappropriated
code (i.e., Unixware) (compare SCO's Counts 1-4, with IBM's
Counterclaims 11-12), and if not resolved on summary judgment (as we expect),
IBM's patent claims are likely to present very few triable issues--issues
that could easily be made a small part of a larger trial on non-patent issues[6].

To support its request for a separate trial of the patent claims, SCO argues
that the patent claims will require immense discovery, at least 18 additional
months of it, and thus have to be tried separately to prevent delay in the
resolution of the non-patent claims. As we will explain separately in our
response to SCO's motion to extend the scheduling order and unnecessarily
prolong the case, there is no reason to extend the discovery period on the
patent claims (as to which IBM, not SCO, bears the burden to show infringement).
The parties should be able to complete patent discovery on the current schedule
and, in the event they are not, IBM is amenable to a brief extension of the
discovery period to permit additional patent discovery without compromising
the present trial date. In any case, whether the discovery period should
be enlarged is obviously a separate issue from whether the Court should separate
the patent and non-patent claims and issues for trial and cannot justify
SCO's request for separate trials.

In sum, it may or may not make sense to segregate certain claims or issues
for separate trials. There is, however, no reason to decide that now, especially
when it is not clear which, if any, of the claims and issues presented will
require a trial. SCO's motion should therefore be denied without prejudice
to being renewed later in the case after the parties have properly met and
conferred on the issues.

CONCLUSION

For all of the foregoing reasons, SCO's motion should be denied without
prejudice.

DATED this 12th day of April, 2004.

SNELL & WILMER L.L.P.

[signature]
Alan Sullivan
Todd M. Shaughnessy
Nathan E. Wheatley

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler
David R. Marriott

Attorneys for Defendant/Counterclaim-Plaintiff International Business Machines
Corporation

Attorneys for Defendant/Counterclaim-Plaintiff International Business Machines
Corporation

[1] An operating system is a group of programs that allows a computer to
operate by performing basic tasks such as recognizing input from the keyboard,
keeping track of files, and controlling disk drives.

[4] See Contini v. Hyundai Motor Co. 149 F.R.D.
41 (S.D.N.Y. 1993) ("bifurcation is premature at this stage of the litigation" because
the defendant
"expects to submit a motion for summary judgment" and the Court does "not
know whether the motion [to bifurcate]...will become moot"); see also
eBay, Inc. v. Bidder's Edge Inc. No. C-99-21200 RMW, 2000 WL 1863564,
at *4 (N.D. Cal. July 25, 2000) (deferring decision on bifurcation until
pretrial
conference where "complete discovery will educate the parties regarding the
strengths and weaknesses of their positions...."); Krueger v. New York Tel.
Co., 163 F.R.D. 446, 447 (S.D.N.Y. 1995) (denying motion for bifurcation "because
discovery is not yet complete [and] [t]he continuing development of the factual
record in this case may well affect the issues to be tried....").

[5] According to SCO: "First, the parties each allege business tort claims,
such as disparagement, unfair competition, and interference with actual or
prospective contractual relations. Second, each alleges the other infringed
its copyrights. Third, the parties seek, through this litigation, a determination
of the meaning and consequences, if any, of their respective contributions
to and distributions of Linux." (Pl.'s Mem. Supp. Mot. for Separate Trials,
at 4.)

[6] If taken at face value, SCO's arguments would require that IBM's patent
claims each be tried separately. SCO represents that "IBM's four patent counterclaims
are as separable from one another as they are from the rest of the claims
and issues in this lawsuit." (Pl.'s Mem. Supp. Mot. for Separate Trials,
at 5.) While obviously different, the patent claims are not so different
as to merit separate trials.

CERTIFICATE OF SERVICE

I hereby certify that on the 12 day of April, 2004, a true and correct copy
of the foregoing was hand delivered to the following: